MGI Pharma, Inc., an oncology and acute care focused biopharmaceutical company, and Guilford Pharmaceuticals Inc., a biopharmaceutical company engaged in the research, development and commercialization of drugs that target the acute care market, have signed a definitive merger agreement dated July 20, 2005, providing for the acquisition of Guilford Pharmaceuticals Inc. by MGI Pharma.

According to the company release, MGI Pharma intends to build a leading biopharmaceutical company focused in oncology and acute care through a business development strategy that broadens both its portfolio of commercial products and pipeline of product candidates. This transaction further strengthens MGI Pharma's commercial infrastructure and product development franchises in oncology and acute care, adds to an already robust pipeline of product candidates, and will help drive long-term financial growth of the company.

MGI Pharma will acquire all of the outstanding shares of Guilford for $3.75 per share in a taxable merger. This consideration, which represents a premium of 55.6% over Guilford's closing price on July 20, 2005, consists of a fractional share of MGI Pharma common stock valued at $2.625 and $1.125 in cash. The stock portion of this consideration is subject to a 15% collar. Based upon the closing price of MGI Pharma stock on July 20, 2005, MGI Pharma expects to issue approximately 4.5 million shares as part of this transaction.

Lonnie Moulder, president and chief executive officer of MGI Pharma says, "In addition to a talented group of people, this transaction brings several important assets to MGI Pharma, including Aquavan injection, a late-stage, acute care product candidate for procedural sedation that, upon approval, will be an excellent companion product to Aloxi injection for PONV. Gliadel wafer, a marketed product for high grade malignant gliomas complements our current oncology franchise and provides an immediate revenue opportunity, and the Guilford field organization, with established relationships in acute care, will immediately be leveraged to advance market penetration of Aloxi injection in CINV and, upon approval, Dacogen injection."

"Moreover, the addition of two early stage programs, NAALADase inhibitors for chemotherapy-induced neuropathy, and PARP inhibitors, as chemotherapy or radiation therapy sensitizers, fit strategically into our oncology development pipeline," continued Mr. Moulder.